Palm Beach County home prices rise slightly, sales volumes fall

Palm Beach County, Fla., home prices continued their trend of modest appreciation in October, and sales volumes dipped despite a robust economy.

The typical house sold by an agent traded for $359,000 last month, according to the Broward, Palm Beaches and St. Lucie Realtors. That was up 3.3% from a year ago but down a bit from the pricing levels of May and June.

Debbie Smith, broker at ERA Home Run Real Estate in suburban Lake Worth, called the 3% annual increase a healthy level of appreciation.

"You don't want to see 20, 30, 40% increases," Smith said.

However, home sales fell to 1,369, down 6.2% from October 2018, Realtors said. The decline comes in spite of record-low unemployment, record-high stock prices and rock-bottom mortgage rates, three economic factors that typically drive demand for homes.

Even with modest levels of appreciation, some middle-class buyers are being squeezed out of Palm Beach County's property market. Smith said she recently worked with two clients who decided to buy in Port St. Lucie because they could get houses for less than $300,000. St. Lucie County's median price was $237,000 in October.

"Both of those buyers went there because Palm Beach County was just a little too high for them," Smith said.

The housing market in Palm Beach County and nationally remains something of a conundrum. The job market is booming, and mortgage rates have plunged over the past year.

Nationally, home sales rose 1.9% from October 2018, while the median sales price jumped 6.2%, the National Association of Realtors said.

"Historically low interest rates, continuing job expansion, higher weekly earnings and low mortgage rates are undoubtedly contributing to these higher numbers," said Lawrence Yun, chief economist at the National Association of Realtors.

Mortgage rates remain at rock-bottom levels. The average 30-year fixed-rate mortgage cost 3.66% as of Thursday, mortgage giant Freddie Mac said.

Borrow $300,000 at 3.66%, and the monthly payment is $1,374. Taking a loan for the same sum at last fall's rate of 4.81% meant a monthly payment of $1,576.

Meanwhile, the U.S. economy has been expanding for more than a decade, and the stock market remains near record highs.

All those tailwinds typically combine to create a booming real estate market. Instead, the housing market hasn't rebounded strongly.

In one example of confusing signals, the median price of Palm Beach County condos and townhouses sold by Realtors fell 7% from a year earlier, to $172,000, while the number of sales fell nearly 3% from October 2018.

Most condo sales in Palm Beach County close without loans, so mortgage rates are a minor factor in that market. However, loan programs run by the Federal Housing Administration and the Veterans Administration are beginning to allow borrowers to buy condos, a shift that might open those units to first-time buyers, Smith said.

Palm Beach County home prices remain well below their record highs. In November 2005, the median house price hit an all-time high of $421,500.

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